Income
The next section of of the 1040 is your income.
Line 7 – is your wages from your W-2, this is the total amount of money you made (before taxes).
Line 8 – Taxable and Tax-exempt interest. These would be from 1099-INT or 1099-OID, you usually get these from the bank for your savings account, etc.
Line 9 – Ordinary and Qualified dividends. These would be on a 1099-DIV
Line 10 – Taxable refunds, credits, or offsets of state and local income taxes. This would be your refund from your city and state taxes for the previous year. Yes, you are supposed to claim this as income.
Line 11 – Alimony received. This would be the amount of money you received in alimony payments
Line 12 – Business income or (loss). This would be the amount from your Schedule C or C-EZ.
Line 13 – Capital gain or (loss). This goes along with the dividends from Line 9.
Line 14 – Other gains or (loss). This is for sold or exchanged assets.
Line 15 – IRA distributions, if you received money from your IRA.
Line 16 – Pensions and annuities, this information would come from a 1099-R
Line 17 – Income from rental real estate, royalties, partnerships, etc.
Line 18 – Income (loss) from a farm.
Line 19 – Unemployment compensation. This would be any monies you received while on unemployment, over $2,400. This number would be on a 1099-G
Line 20 – Social security benefits, any money you received from social security.
Line 21 – Other Income. This would be all other incomes that you received that you didn’t receive a 1099 or other forms. This would be gambling winnings, Jury duty pay, income from an activity not engaged in for profit, etc. Only list taxable income monies here, not non-taxable income.
Line 22 – Add all amounts from line 7-21. This is your total income (how much money you actually made that year).
All family information in my tax tips are examples and will be for the same family all the way through the tips
That was the easy part, stay tuned for more the remaining sections. The next tax tip on the 1040 will be adjusted gross income.
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One thing that is a common mistake – IRS wants gross gambling winnings on line 21 not NET. Losses are absolutely deductible but they go on Sched A line 27 … “W2G gambling losses”. If your tax situation does not provide enough deductions to make itemizing showing your gambling losses worthwhile, then losses do not get shown. This is from 1040 instruction booklet which says gambling winnings go on line 21 – “for details on gambling losses, see the instructions for Schedule A, line 28″
My state does want a NET directly on the gambling income line which adds to the confusion.
Line 21 is also the line where we add in any prize winnings – assuming we were lucky enough to win anything.
Betty, Thank you! I forgot that when I was doing this I was just doing a standard 1040, without all the bells and whistles. I’ve removed the losses part, so I don’t get people lost and will discuss that in another area of deductions.
This is a wonderful idea Shawn Ann. You’ve posted so much info today.
Amazing how many people year after year simply make no effort to understand what goes where on the tax form. They blindly trust whatever their mother/friend/paid preparer decides to put on the form.
I agree, people really should take the time to find out where the numbers come from and ensure they understand their returns.
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